Fin24

Oil slides after weak US jobs report

2011-09-05 08:24

Singapore - Oil prices extended losses to below $86 a barrel on Monday in Asia as a dismal August jobs report suggested that a weak US economy will lessen demand for crude.

Benchmark oil for October delivery was down 65 cents to $85.80 at midday Singapore time in electronic trading on the New York Mercantile Exchange. Crude fell $2.48 to settle at $86.45 on Friday.

In London, Brent crude for October delivery was down 75c at $111.58 on the ICE Futures exchange.

Crude has fallen since the Labour Department said on Friday that US employers stopped adding jobs in August and the unemployment rate remained at 9.1%.

Oil had risen from $76 on August 9, the low for the year so far.

"The oil market suffered a severe blow" from the jobs figures, energy consultant Ritterbusch and Associates said in a report. "It reinforced our longer term expectation for a price decline into new low territory."

US gasoline demand during the summer driving season - from May 30 to Monday - fell 4.1% from a year earlier as prices rose 34%, according to estimates by Barclays Capital.

"Gasoline demand has been affected by higher prices and weaker GDP," Barclays said in a report.

In other Nymex trading for October contracts, heating oil fell 2.0c to $2.98 per gallon and gasoline futures dropped 2c to $2.82 per gallon.

Natural gas for October delivery gained 2c to $3.89 per 1 000 cubic feet.